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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 10 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.40. The lowest was -2.79. And the median was -2.50.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Verisk Analytics Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.6297||+||0.528 * 1.0562||+||0.404 * 1.0056||+||0.892 * 1.3727||+||0.115 * 0.7949|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9952||+||4.679 * 0.0055||-||0.327 * 0.8872|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $230 Mil.|
Revenue was 498.081 + 498.296 + 492.701 + 477.4 = $1,966 Mil.
Gross Profit was 328.416 + 319.83 + 319.424 + 316.698 = $1,284 Mil.
Total Current Assets was $464 Mil.
Total Assets was $4,685 Mil.
Property, Plant and Equipment(Net PPE) was $356 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $300 Mil.
Total Current Liabilities was $556 Mil.
Long-Term Debt was $2,279 Mil.
Net Income was 127.577 + 261.736 + 92.639 + 113.78 = $596 Mil.
Non Operating Income was 2.124 + 0.846 + 0.044 + -0.221 = $3 Mil.
Cash Flow from Operations was 85.186 + 74.606 + 303.879 + 103.656 = $567 Mil.
|Accounts Receivable was $266 Mil.
Revenue was 470.408 + 428.599 + 384.293 + 149.238 = $1,433 Mil.
Gross Profit was 307.534 + 273.96 + 250.509 + 156.254 = $988 Mil.
Total Current Assets was $618 Mil.
Total Assets was $5,619 Mil.
Property, Plant and Equipment(Net PPE) was $392 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $220 Mil.
Total Current Liabilities was $1,541 Mil.
Long-Term Debt was $2,293 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(229.939 / 1966.478)||/||(266 / 1432.538)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(988.257 / 1432.538)||/||(1284.368 / 1966.478)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (464.301 + 355.867) / 4685.051)||/||(1 - (617.762 + 391.625) / 5619.097)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(185.386 / (185.386 + 391.625))||/||(241.424 / (241.424 + 355.867))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(300.016 / 1966.478)||/||(219.62 / 1432.538)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((2279.443 + 556.49) / 4685.051)||/||((2292.892 + 1540.758) / 5619.097)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(595.732 - 2.793||-||567.327)||/||4685.051|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Verisk Analytics Inc has a M-score of -2.42 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Verisk Analytics Inc Annual Data
Verisk Analytics Inc Quarterly Data